IMF sees recovery in growth this year

Washington, April 8 (PTI): India’s growth is expected to recover from 4.4 per cent in 2013 to 5.4 per cent in 2014, the IMF said today.

“Growth is expected to recover from 4.4 per cent in 2013 to 5.4 per cent in 2014, supported by slightly stronger global growth, improving export competitiveness and implementation of recently approved investment projects,” the latest edition of the World Economic Outlook, released by the International Monetary Fund (IMF), said.

“A pick-up in exports in recent months and measures to curb gold imports have contributed to lowering the current account deficit.

Overall growth is expected to firm up on policies supporting investment and a confidence boost from recent policy actions, but will remain below trend, it added.

“Consumer price inflation is expected to remain an important challenge, but should continue to move on to a downward trajectory,” the IMF report said.

The outlook also projected India’s growth rate to increase to 6.4 per cent in 2015. In 2012, the growth rate stood at 4.7 per cent.

“For India, real GDP growth is projected to strengthen to 5.4 per cent in 2014 and 6.4 per cent in 2015, assuming that government efforts to revive investment growth succeed and export growth strengthens after the recent rupee depreciation,” the report said.

Further tightening of the monetary stance might be needed for a durable reduction in inflation and inflation expectations.

“Continued fiscal consolidation will be essential to lower macroeconomic imbalances,” it said.

Policymakers in India must also concentrate on structural reforms to support investment, which has slowed markedly, the IMF report said.

“Priorities include market-based pricing of natural resources... addressing delays in the implementation of infrastructure projects, improving policy frameworks in power and mining, reforming the extensive network of subsidies, and securing passage of the new goods and services tax,” the IMF said.

The forecast for China is that growth will remain broadly unchanged at about 7.5 per cent in 2014-15, only a modest decline from 2012-13.

This projection is based on the assumption that the authorities will gradually rein in rapid credit growth and make progress in implementing their reform blueprint so as to put the economy on a more balanced and sustainable growth path, the report said.